KCGS Downgrades ESG Ratings of 10 Companies Including Daishin Securities and Shinhan Financial Group

[Asia Economy Reporter Minji Lee] The Korea Corporate Governance Service (KCGS) announced on the 10th that it held an ESG rating committee on the 6th and downgraded the ESG ratings of 10 companies, including Daishin Securities and Shinhan Financial Investment. This reflects the ESG risks identified during the first quarter of this year since the first ESG rating adjustment in January 2020.

ESG ratings are divided into seven grades: S, A+, A, B+, B, C, and D. As a result of the second rating adjustment, companies downgraded due to risks in Environmental Management (E), Social Responsibility Management (S), and Governance (G) were one, eight, and two companies, respectively.

In the environmental management sector, Lotte Chemical was downgraded from B to C, reflecting the explosion accident at the Daesan plant.

In the social responsibility management sector, the ratings of Lotte Chemical, Shinhan Financial Group, Hyundai Steel, BGF Retail, Ssangyong Cement, Daishin Securities, KT, and Pan Ocean were lowered. Shinhan Financial Group was downgraded from A to B+ due to its subsidiary Shinhan Bank and Shinhan Financial Investment being involved in the Lime Asset Management redemption suspension incident.

Daishin Securities was downgraded from B+ to B, reflecting the Financial Supervisory Service investigation and prosecution raids related to the incomplete sale of Lime funds.

In the governance sector, Shinhan Financial Investment and Sinhwa Industrial were adjusted. Shinhan Financial Investment was downgraded from B+ to B, considering the prosecution investigation over allegations of concealment and fraud related to the trade finance fund.

A KCGS official stated, "Due to individual rating adjustments, the integrated ratings of five companies were downgraded by one level," adding, "The frequency of ESG rating adjustments will be expanded from once every six months to once every quarter, with the next rating adjustment scheduled for July."